Budget 2019: Sitharaman gives respite to power sector; UDAY scheme to be improved, new package soon

Budget 2019: Finance Minister Nirmala Sitharaman proposed to give respite to beleagured power sector, as she said that the government will improve the "Ujwal DISCOM Assurance Yojana" and a package for the power sector will be announced soon. Tabling her maiden budget in Lok Sabha today, she said the government will come out with new tariff policy for the power sector.

The Finance Minister said the Centre is going to work with the state governments to remove the barriers in the implementation of the UDAY scheme for the turnaround of power distribution companies. Notably, the scheme was launched in 2015 by the then MoS (IC) for Power Piyush Goyal. The scheme faced criticism from several counters over rising debt and overdues of power discoms.

Jharkhand earned the distinction of become the first state to come under this scheme, followed by other states, which gave in-principle approval, include Gujarat, Chhattisgarh, Andhra Pradesh, Karnataka, Rajasthan, Punjab, Haryana, Jammu and Kashmir, Himachal Pradesh, Madhya Pradesh, Uttarakhand, Telangana, Assam. Later Uttar Pradesh, Bihar, Maharashtra, Tamil Nadu and Mizoram also joined, thereby making the total of 27 states to have joined, and so far 32 states/UT have joined this scheme.

Under the UDAY, the government had initiated the move for financial turnaround and revival package for electricity distribution companies of India (DISCOMs) to find a permanent solution to the financial mess faced by power distribution segment. It allows state governments, which own the DISCOMs, to take over 75 percent of their debt as of September 30, 2015, and pay back lenders by selling bonds. DISCOMs are expected to issue bonds for the remaining 25 percent of their debt.